ASOS set to reveal interim growth

Online fashion retailer ASOS (LON:ASC) is reporting its interims on Thursday 8 April and the figures will show if growth has slowed down since the first four months of the year.

In the four months to December 2020, UK sales were 36% higher. Overall group sales were 23% ahead with Europe, the US and rest of the world all growing at around 18%. France was a strong market because shops were closed.

There was a change in mix of sales with more business in areas such as face and body and leisurewear. That led to a dip in gross margin.

Six months

The rate of growth is not expected to be maintained during the full six-month period. The level will be important in assessing the outcome for the year.

Peel Hunt expects interim pre-tax profit to be £90m on revenues of £1.93bn. That does not include integration costs for the Top Shop integration, which have been flagged as £20m.   

ASOS acquired the Topshop, Topman, Miss Selfridge and HIIT brands, but not the associated stores, for £265m. The brands had generated annual revenues of more than £1bn and possibly more than £150m of those sales were online. ASOS expects to invest £30m in additional working capital on top of the restructuring charge.

Active

Active customers increased by 5% in the first four months, although this rate is not likely to be maintained. Active customers could increase as different countries come out of lockdown, but others may go back into lockdown and hamper progress.

The comparatives will initially be weaker in the second half. Trading improved later in the last financial year.

As the UK comes out of lockdown there could be greater demand for clothing for going out and other summer products.

Full year revenue forecasts of more than £3.9bn may be too conservative if the first half trading is strong. Full year pre-tax profit of £167m is the consensus but ASOS could be better than that.

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Andrew Hore
Andrew Hore is the publisher of AIM Journal, which is an online monthly publication covering the Alternative Investment Market.